Economic Quarterly

Winter 1996

The Early History of the Box Diagram

From Francis Edgeworth in the 1880s to Paul Samuelson and Kenneth Arrow in the 1950s, economists found a simple diagram the key to unlocking the deepest mysteries of economic theory. The optimality of competitive equilibrium, the inefficiency of simple monopoly pricing, the logic of optimum resource allocation, the sources of and gains from trade, the factor-share effects of tariffs, the impact of increasing numbers on the core of the economy--all were rendered transparent by the diagram.